For more than a decade, health insurance costs have increased for both individuals and groups at a rate deemed unsustainable by health care industry professionals.

The Greater Houston area and Texas are not immune. Each of the 13 carriers accessible in the state through the National Health Insurance Marketplace are proposing 2017 rate increases as high as 60 percent.

Employers are shifting more costs to employees as plans are required to include more coverage options, said William Short, CEO of national human resources company Ameriflex.

“Employers are going to have to become and are becoming very creative,” he said.

Health care and insurance industry professionals attribute the increases to  myriad factors but acknowledge some core issues: federal regulations that require employers to cover more than before, more cumbersome insurance plans and rising medical service costs.

Fewer options offered by the marketplace statewide will further reduce what experts say is a lack of competitive pricing by hospitals and insurance carriers.

Cost of care

Nearly 140 million people—roughly
43 percent of the U.S. population—receive insurance from employers, Short said. Most people find this more cost-effective than going through the exchange for insurance, said Marah Short, associate director of the Center for Health and Biosciences at Rice University’s Baker Institute for Public Policy.

“Whenever you move to the exchange, you don’t get anything subsidized because your employer and employee are both paying for it,” she said.

Among the providers staying in the exchange, Blue Cross Blue Shield cited a potential premium increase of 60 percent on the exchange in 2017, saying the company lost $770 million in the marketplace during 2015. Humana will also offer a plan, but is reported to have a premium increase of 45 percent, according to healthinsurance.org.

Blue Cross Blue Shield also stopped offering a preferred provider organization plan, or PPO, on the exchange in 2016. Only two PPOs remain available on the exchange in Houston, and the rest are more costly HMO plans, said Travis Middleton Jr., president of TradeMark Insurance Agency in Houston.

Marah Short said the sticker shock of insuring more people was likely a reason some carriers pulled out of the insurance exchange.

“We do have people on insurance who hadn’t had it before, maybe they had pre-existing conditions or had some kind of chronic condition,” she said.

Ken Janda, president and CEO of Community Health Choice, a nonprofit health plan available in the Greater Houston area, said as patients are insured longer, insurance costs will likely decrease.

“We believe that long term, someone who has been insured for 10 or 15 years and has had more preventive care services will save us money,” Janda said. “The main drivers of the increasing cost in the marketplace [is] the people that we actually signed up have turned out to be older and sicker than we thought they would be.”

Effects to employees

Deductibles on employer-provided insurance plans are increasing to keep employees’ rising premiums down, according to the Kaiser Family Foundation, a nonprofit that collects data on health care.

Mark Park owns AAA Plumbers, which services northwest Harris County with clients in Spring and Klein. He has 68 employees and said the company has always provided full medical coverage for its employees.

“Honestly, [the Affordable Care Act] has been a mess for our company,”
he said.

He said AAA Plumbers employees are receiving less coverage with higher deductibles and premiums.

“In the last three years alone, our medical insurance premiums have increased over $80,000,” he said. “It’s nearly impossible to pass that kind of increase along to customers.”

He said the company has been advised by insurance agents to require employees to start paying a portion of their insurance.

“I am not sure we can continue to absorb the increase in premiums year after year,” Park said.

Spring ISD Chief Financial Officer Ann Westbrooks said the main costs incurred by the district include time spent filing the necessary reports to the IRS and subsequent IRS inquiries. She said the plan offered by the district remains affordable to employees.

“The big thing [about the Affordable Care Act] is making sure that our premiums are affordable under the calculator [the government] gave us,” she said. “It looks at the lowest available plan—it’s the highest deductible plan.”

As long as Klein ISD employees take the employee-only plan, the insurance remains affordable—good or better than the marketplace—although it is a high-deductible plan, said Rick Stockton, KISD director of benefits and risk management
services.

“But most of them are looking at family coverage,” Stockton said. “And our plan with family coverage isn’t cheap.”

KISD’s enrollment in medical plans has increased by 10-15 percent over the past year, he said.

“It’s a perfect example of any time you manipulate the free market you get results like this,” said Barbara Thomason, Houston Northwest Chamber of Commerce president of the rising health care costs. “When you force the hand of a particular industry, it can backfire.”

She said local businesses are likely experiencing what the chamber is experiencing. The chamber’s insurance doubled two years ago, which required a shift to a coverage plan with 60 percent of costs covered from 75 percent.

“[ACA] has caused people to have higher deductibles, and their rates have gone up along with that,” said Guy Jones, owner of Health Insurance of Texas, a Spring insurance agency.

He said the advantage to the Affordable Care Act is that now he can approve anyone for coverage, which enables  all people are to obtain preventive care, such as pap smears and breast exams.

Overall outlook

The upward trend of health insurance costs shows no signs of stopping,
said Joel White, president of the Council for Affordable Health Coverage in Washington, D.C.

He and Terry Wheeler, CEO of Cypress Fairbanks Medical Center Hospital, said competition should be fiercer among hospitals and insurance carriers in order to drive down costs.

“If you only had the choice of three banks or four banks [for example], there would be fewer and fewer options and you would have higher interest rates,” Wheeler said.

White and Middleton said greater transparency from hospitals and carriers would help patients make more informed decisions about procedures.

Memorial Hermann is the only Houston hospital system that offers its own insurance plan. Dan Styf, the CEO of the Memorial Hermann Health Plan, said the plan covers 70,000 individuals.

“It is becoming a popular option because health care systems with traditional insurers are very fragmented,” Styf said. “Our system enables the insurer and health care delivery system to align their interests to the same side.”

Remedies are available, such as improving medical efficiencies and future policy changes from the nation’s capitol,
White said.

He speculated that if the situation remains unchanged, the average American family could be spending half its income on health care by 2030.

“This is [a] serious problem that is impacting people at a very real level,” he said. “My sense is smart policy-makers, smart politicians will start trying to drive costs down.”

While insurance should be available to everyone, it should be evaluated on economic reality, Thomason said.

“I think that the Affordable Care Act was based on fiction,” she said.